Bill C-9 (Historical)

Jobs and Economic Growth Act

An Act to implement certain provisions of the budget tabled in Parliament on March 4, 2010 and other measures

Part 1 of this enactment implements income tax measures proposed in the March 4, 2010 Budget. In particular, it
(a) introduces amendments to allow a recipient of Universal Child Care Benefit amounts to designate that the amounts be included in the income of the dependant in respect of whom the recipient has claimed an Eligible Dependant Credit, or if the credit is not claimed by the recipient, a child of the recipient who is a qualified dependant under the Universal Child Care Benefit Act;
(b) clarifies rules relating to the Medical Expense Tax Credit to exclude expenses for purely cosmetic procedures;
(c) clarifies rules relating to payments made to a Registered Education Savings Plan or a Registered Disability Savings Plan through a program funded, directly or indirectly, by a province or administered by a province;
(d) implements amendments to the family income thresholds used to determine eligibility for Canada Education Savings Grants, Canada Disability Savings Grants and Canada Disability Savings Bonds;
(e) reinstates the 50% inclusion rate for Canadian residents who have been in receipt of U.S. social security benefits since before January 1, 1996;
(f) extends the mineral exploration tax credit for one year;
(g) reduces the rate of interest payable by the Minister of National Revenue on tax overpayments made by corporations;
(h) modifies the definition “taxable Canadian property” to exclude certain shares and other interests that do not derive their value principally from real or immovable property situated in Canada, Canadian resource property, or timber resource property;
(i) introduces amendments to allow the issuance of a refund of an overpayment of tax under Part I of the Income Tax Act to certain non-residents in circumstances where an assessment of such amounts has been made outside the usual period during which a refund may be made;
(j) repeals the exclusion for indictable tax offences from the proceeds of crime and money laundering regime; and
(k) increases the pension surplus threshold for employer contributions to registered pension plans to 25%.
Part 2 amends the Excise Act, 2001 and the Customs Act to implement an enhanced stamping regime for tobacco products by introducing new controls over the production, distribution and possession of a new excise stamp for tobacco products.
Part 2 also amends the Excise Tax Act and certain related regulations in respect of the Goods and Services Tax/Harmonized Sales Tax (GST/HST) to:
(a) simplify the operation of the GST/HST for the direct selling industry using a commission-based model;
(b) clarify the application of the GST/HST to purely cosmetic procedures and to devices or other goods used or provided with cosmetic procedures, and to services related to cosmetic procedures;
(c) reaffirm the policy intent and provide certainty respecting the scope of the definition of “financial service” in respect of certain administrative, management and promotional services;
(d) address advantages that currently exist in favour of imported financial services over comparable domestic services;
(e) streamline the application of the input tax credit rules to financial institutions;
(f) provide a new, uniform GST/HST rebate system that will apply fairly and equitably to employer-sponsored pension plans;
(g) introduce a new annual information return for financial institutions to improve GST/HST reporting in the financial services sector; and
(h) extend the due date for filing annual GST/HST returns from three months to six months after year-end for certain financial institutions.
In addition, Part 2 amends regulations made under the Excise Tax Act and the Excise Act, 2001 to reduce the interest rate payable by the Minister of National Revenue in respect of overpaid taxes and duties by corporations.
Part 3 amends the Air Travellers Security Charge Act to increase the air travellers security charge that is applicable to air travel that includes a chargeable emplanement on or after April 1, 2010 and for which any payment is made on or after that date. It also reduces the interest payable by the Minister of National Revenue to corporations under that Act.
Part 4 amends the Softwood Lumber Products Export Charge Act, 2006 to provide for a higher rate of charge on the export of certain softwood lumber products from the regions of Ontario, Quebec, Manitoba or Saskatchewan. It also amends that Act to reduce the rate of interest payable by the Minister of National Revenue on tax overpayments made by corporations.
Part 5 amends the Customs Tariff to implement measures announced in the March 4, 2010 Budget to reduce Most-Favoured-Nation rates of duty and, if applicable, rates of duty under other tariff treatments on a number of tariff items relating to manufacturing inputs and machinery and equipment imported on or after March 5, 2010.
Part 6 amends the Federal-Provincial Fiscal Arrangements Act to provide additional payments to certain provinces and to correct a cross-reference in that Act.
Part 7 amends the Expenditure Restraint Act to impose a freeze on the allowances and salaries to be paid to members of the Senate and the House of Commons for the 2010–2011, 2011–2012 and 2012–2013 fiscal years.
Part 8 amends a number of Acts to reduce or eliminate Governor in Council appointments, including the North American Free Trade Agreement Implementation Act. This Part also amends that Act to establish the Canadian Section of the NAFTA Secretariat within the Department of Foreign Affairs and International Trade. In addition, this Part repeals The Intercolonial and Prince Edward Island Railways Employees’ Provident Fund Act. Finally, this Part makes consequential and related amendments to other Acts.
Part 9 amends the Pension Benefits Standards Act, 1985. In particular, the Act is amended to
(a) require an employer to fully fund benefits if the whole of a pension plan is terminated;
(b) authorize an employer to use a letter of credit, if certain conditions are met, to satisfy solvency funding obligations in respect of a pension plan that has not been terminated in whole;
(c) permit a pension plan to provide for variable benefits, similar to those paid out of a Life Income Fund, in respect of a defined contribution provision of the pension plan;
(d) establish a distressed pension plan workout scheme, under which the employer and representatives of members and retirees may negotiate changes to the plan’s funding requirements, subject to the approval of the Minister of Finance;
(e) permit the Superintendent of Financial Institutions to replace an actuary if the Superintendent is of the opinion that it is in the best interests of members or retirees;
(f) provide that only the Superintendent may declare a pension plan to be partially terminated;
(g) provide for the immediate vesting of members’ benefits;
(h) require the administrator to make additional information available to members and retirees following the termination of a pension plan; and
(i) repeal spent provisions.
Part 10 provides for the retroactive coming into force in Canada of the Agreement on Social Security between Canada and the Republic of Poland.
Part 11 amends the Export Development Act to grant Export Development Canada the authority to establish offices outside Canada. It also clarifies that Corporation’s authority with respect to asset management and the forgiveness of certain debts and obligations.
Part 12 enacts the Payment Card Networks Act, the purpose of which is to regulate national payment card networks and the commercial practices of payment card network operators. Among other things, that Act confers a number of regulation-making powers. This Part also makes related amendments to the Financial Consumer Agency of Canada Act to expand the mandate of the Agency so that it may supervise payment card network operators to determine whether they are in compliance with the provisions of the Payment Card Networks Act and its regulations and monitor the implementation of voluntary codes of conduct.
Part 13 amends the Financial Consumer Agency of Canada Act to provide the Financial Consumer Agency of Canada with a broader oversight role to allow it to verify compliance with ministerial undertakings and directions. The amendments also increase the Agency’s ability to undertake research, including research on trends and emerging consumer protection issues. Finally, the Part makes consequential amendments to other Acts.
Part 14 amends the Proceeds of Crime (Money Laundering) and Terrorist Financing Act to confer on the Minister of Finance the power to issue directives imposing measures with respect to certain financial transactions. The amendments also confer on the Governor in Council the power to make regulations that limit or prohibit certain financial transactions. This Part also makes a consequential amendment to another Act.
Part 15 amends the Canada Post Corporation Act to modify the exclusive privilege of the Canada Post Corporation so as to permit letter exporters to collect letters in Canada for transmittal and delivery outside Canada.
Part 16 amends the Canada Deposit Insurance Corporation Act to allow the Governor in Council to specify when a bridge institution will assume a federal member institution’s deposit liabilities and allow the Canada Deposit Insurance Corporation to make by-laws with respect to information and capabilities it can require of its member institutions. This Part also amends that Act to establish the rules that apply to the assignment, by the Canada Deposit Insurance Corporation to a bridge institution, of eligible financial contracts to which a federal member institution is a party.
Part 17 amends the Bank Act and other related statutes to provide a framework enabling credit unions to incorporate and continue as banks. The model is based on the framework applicable to other federally regulated financial institutions, adjusted to give effect to cooperative principles and governance.
Part 18 authorizes the taking of a number of measures with respect to the reorganization and divestiture of all or any part of Atomic Energy of Canada Limited’s business.
Part 19 amends the National Energy Board Act in order to give the National Energy Board the power to create a participant funding program to facilitate the participation of the public in hearings that are held under section 24 of that Act. It also amends the Nuclear Safety and Control Act to give the Canadian Nuclear Safety Commission the power to create a participant funding program to facilitate the participation of the public in proceedings under that Act and the power to prescribe fees for that program.
Part 20 amends the Canadian Environmental Assessment Act to streamline certain process requirements for comprehensive studies, to give the Canadian Environmental Assessment Agency authority to conduct most comprehensive studies and to give the Minister of the Environment the power to establish the scope of any project in relation to which an environmental assessment is to be conducted. It also amends that Act to provide, in legislation rather than by regulations, that an environmental assessment is not required for certain federally funded infrastructure projects and repeals sunset clauses in the Regulations Amending the Exclusion List Regulations, 2007.
Part 21 amends the Canada Labour Code with respect to the appointment of appeals officers and the appeal hearing procedures.
Part 22 authorizes payments to be made out of the Consolidated Revenue Fund for various purposes.
Part 23 amends the Telecommunications Act to make a carrier that is not a Canadian-owned and controlled corporation eligible to operate as a telecommunications common carrier if it owns or operates certain transmission facilities.
Part 24 amends the Employment Insurance Act to establish an account in the accounts of Canada to be known as the Employment Insurance Operating Account and to close the Employment Insurance Account and remove it from the accounts of Canada. It also repeals sections 76 and 80 of that Act and makes consequential amendments in relation to the creation of the new Account. This Part also makes technical amendments to clarify provisions of the Budget Implementation Act, 2008 and the Canada Employment Insurance Financing Board Act that deal with the Canada Employment Insurance Financing Board.

Jobs and Economic Growth Act

[Vic Toews, Conservative, Provencher, MB]

moved that Bill C-9, An Act to implement certain provisions of the budget tabled in Parliament on March 4, 2010 and other measures, be read the second time and referred to a committee.

[Ted Menzies, Conservative, Parliamentary Secretary to the Minister of Finance]

Mr. Speaker, I rise to start the second reading debate on the jobs and economic growth act. This ambitious legislation includes key elements of budget 2010 and year two of Canada's economic action plan. The jobs and economic growth act, a key component of that plan, is a testament to the proactive and aggressive actions that our Conservative government has taken; actions to ensure that not only Canada was protected from the worst of the global economic storm but that we will lead the global economic recovery.

As CIBC economist Warren Lovely recently noted:

Simply put, highly rated Canada offers safe harbour.... Few advanced economies boast stronger real GDP growth prospects--a view endorsed by our own economics department, a broad cross section of private sector banks, the Bank of Canada, the IMF and...the OECD. Meanwhile, Canada's near-term growth in nominal GDP should lead the G7...

Our Conservative government, through today's legislation, is working to address the long-term opportunities and challenges that our country will be confronting in the years ahead.

The jobs and economic growth act would accomplish that objective by bringing forward a range of economic measures to contribute to Canada's advantage now and for the future, for example, by: eliminating tariffs on manufacturing inputs and machinery and equipment; eliminating the need for tax reporting under section 116 of the Income Tax Act for many investments; narrowing the definition of taxable Canadian property; implementing important changes to strengthen federally regulated private pension plans; implementing the one time transfer protection payment to provincial governments announced in December 2009; regulating national payment card networks and their operators, if necessary; enabling credit unions to incorporate federally and operate as banks; making it easier for companies to offer telecommunication services to Canadians; stimulating the mining industry by extending the mineral exploration tax credit; creating greater tax fairness between single and two parent families with respect to claiming universal child care benefit amounts; implementing an enhanced stamping regime for tobacco products to deter contraband. There is much more in this document.

The jobs and economic growth act would also help restrain and focus spending. It proposes to freeze allowances and salaries for parliamentarians and reduce what are known as governor in council federal appointments.

Let us briefly look at a few of the aforementioned highlights of this legislation and hear what Canadians are saying about them.

First, we are proposing to completely eliminate tariffs on manufacturing inputs and machinery and equipment. This bold action will position Canada as the first country in the G7 and G20 to be a tariff-free zone for manufacturing. Manufacturers across this country are applauding that.

Canadian manufacturers will be able to produce their quality goods right here in Canada without job-killing tariffs and without a web of productivity-draining red tape. This will give our manufacturers the competitive advantage they need to succeed in the global marketplace.

This important initiative will lower production costs, increase competitiveness and enhance innovation and productivity. More important, it is estimated that our move to make Canada a tariff-free zone for manufacturing will create 12,000 new, good quality jobs in the years ahead.

This legislation builds on key Canadian economic advantages, such as being home to the soundest financial system in the world, and allows us to boast the lowest tax rate in the G7 for new investment.

The jobs and economic growth act would truly make Canada an even more attractive place for new investment and for the new jobs it would create. This would also further assist in diversifying Canada's trade patterns. It would complement our Conservative government's efforts to grow freer trade with places like the European Union and India and implement recent agreements with Colombia, Panama and Jordan.

Since announcing this bold initiative, we have heard a lot of positive feedback. In earlier speeches on budget 2010, I relayed some of the feedback to the House. Today, I would like to draw the attention of the House to even more applause that has been received since that time.

We have heard from business leaders like Linda Hasenfratz, CEO of Linamar Corporation, who praised the tariff reduction. She said, “Anything that we can do to reduce costs in terms of importing manufacturing equipment is going to be of benefit to us. We do buy a lot of equipment. We tend to spend somewhere between $180 million and $200 million a year on manufacturing equipment, so to improve the cost of that is going to be a benefit to us”.

Dani Reiss, CEO of that popular Arctic Canadian coat manufacturer, Canada Goose, also heralded it as “a great move...tariffs only made it more expensive to be a Canadian manufacturer. I think this move by the government will make made in Canada viable for more apparel companies”.

The Saskatchewan Trade and Export Partnership also calls the tariff-free zone “a big deal”, adding:

Investment in new machinery and the latest technology is one good way to more effectively produce goods and to make them more competitive. Much high-technology equipment must be imported from Europe and Asia, so eliminating tariffs helps make it more affordable for Canadian manufacturers.

Andrew Coyne, the respected public policy commentator and national editor for Macleans magazine cheered it as well. Andrew said that it is “terrific public policy, a shot in the arm for Canada's manufacturers, and a timely example to the rest of the world. It will lower costs, save on paperwork, and improve productivity. It will make Canada the G20's first tariff-free zone, and as such is likely to prove an attractive incentive to locate a plant here”.

I literally could devote my entire speech to passing along the many positive statements we have heard on the tariff-free zone for manufacturing initiatives that is simply a part of budget 2010 and legislated through the jobs and economic growth act. However, I would not have the opportunity to talk about many other great aspects of this bill, so I will move on. Maybe we could talk more about this later during the period for questions and comments.

Let us talk about the major positive pro-growth reform to section 116 of the Income Tax Act. Specifically, the bill helps by eliminating tax reporting for investments such as those by non-resident venture capital funds in a typical Canadian high tech firm. This would enhance the ability of Canadian businesses to attract foreign venture capital, fuelling job creation and economic growth. We have also heard glowing praise for this move from all across Canada.

Dave Bullock, CEO of LiveHive Systems, speaking for the Waterloo region tech cluster that is home to more than 700 technology companies, remarked:

Very simply, amending Section 116 removes one of the biggest barriers to growing successful companies in Canada - access to international investment capital.... This is a change that will give promising Canadian companies the opportunity to get to that next level.

Canada's research-based pharmaceutical companies also cheered the move as “a far-sighted approach...which will have the capacity to boost the flow of venture capital into Canada for biotechnology and biopharmaceutical companies”.

Another key element of the jobs and economic growth act is the important changes to strengthen federally regulated private pension plans. I am proud to say I was personally very involved in the development of these changes. By way of background, in early 2009, our Conservative government announced we would review issues related to pensions under federal jurisdiction, regulated by way of the Pension Benefits Standards Act, 1985.

This represented the first comprehensive review in nearly three decades. We started that process in January 2009 when we released for public comment a major research paper on legislative and regulatory regimes for federally regulated private pension plans. We followed that up with extensive cross-country and online public consultations open to all Canadians. We asked for input on the legislative and regulatory framework for federally regulated private pension plans.

From March until May 2009, I travelled across Canada from Halifax to Vancouver to Whitehorse and many places in between. What is more, despite the challenging timelines and logistical challenges, we never once left anyone at the microphone who wanted to speak. Every single person who wanted to have his or her voice heard on this very important file was offered that opportunity.

Let me take a brief moment to express my thanks to all those people who took the time to participate in that process, either in person or online. Their involvement was central and absolutely necessary for the entire process to be both meaningful and successful. During that consultation I heard very unique, personal and raw stories. This focused my determination to get it right, to ensure that this landmark study of federally regulated private pensions and whatever reforms followed from it got it right. It was just too important.

We carefully reviewed all the submissions throughout the summer and into the early fall of 2009, when we announced a package of significant reforms to federally regulated pensions that, I humbly suggest, did get it right. There is one change I am particularly pleased with and it is included in the jobs and economic growth act. Namely, it is the requirement for plan sponsors who voluntarily wind up a pension plan to fund 100% of their contractual commitments to those plan members.

Travelling around Canada, time and again I heard troubling stories of various plan sponsors who made a decision to stop offering a defined benefit plan to their employees. On too many occasions, this meant that those retirees did not receive 100% of what they had been promised and deserved. The old framework actually allowed that to occur. We thought that was wrong, and that is why we are changing that in this act.

Other key reforms to federally regulated pensions in the jobs and economic growth act consist of the following: authorizing an employer to use a letter of credit if certain conditions are met, to satisfy solvency funding obligations in respect to a pension plan that has not been terminated in whole; establishing a distressed pension plan workout scheme, under which the employer and representatives of the members and retirees may negotiate changes to the plan's funding requirements, subject to the approval of the Minister of Finance; and permitting the superintendent of financial institutions to replace an actuary if the superintendent is of the opinion that it is in the best interests of members or retirees. Much more was added into that as well.

I am happy to report that the reforms we announced were very well received by public interest groups and many commentators. Let me take a moment to share what I heard with the House. First, the National Association of Federal Retirees was “pleased to hear that the Government of Canada is taking action to strengthen the pension framework and enhance benefit security...”.

Dan Braniff, founder of the Common Front for Retirement Security, in a letter to the Minister of Finance wrote, “On behalf of the Common Front for Retirement Security, I wish to congratulate you.... This is an important milestone for creating greater security for many pensioners and plan members.... We also wish to show our appreciation for the excellent work of [the member for Macleod] who travelled across Canada and obviously listened to the voices of pensioners.... Thank you for taking this very important step for better retirement security at this very critical time”.

Raymond Bertrand, president of Bell Pensioners' Group, in a letter to my office, added, “I am writing to you on behalf of the Bell Pensioners' Group to express our appreciation for the manner in which you have consulted with Canadians, and in particular pensioners, who are most affected by amendments.... You made sure the voice of pensioners was heard in the round table consultation process which you so ably led. You clearly identified that one of your main priorities was to protect the pension promise. On behalf of all our members, please accept our thanks for your willingness to move forward the very difficult policy agenda of pension reform”.

Ian Lee, of Carleton University Sprott School of Business, called the reforms “far-reaching because they do address some of the demands that were being made by pension advocates.... What it's going to do is create a framework that is going to allow for greater scrutiny...[and] change the rules whereby companies can contribute more money...in aggregate I think it's going to ensure that our pensions are on a better footing, a more solid foundation”.

As well, the Canadian Labour Congress admitted:

These changes result from the consultations the government has held over the past year and some of them look good....

One more positive element of the jobs and economic growth act that I would like to take a moment to highlight today is the provisions to enable credit unions to incorporate federally. In this legislation, we are proposing to create a federal legislative framework for credit unions. This is to promote the continued growth and competitiveness of the financial sector. Allowing credit unions to grow and be competitive on a national scale will broaden choices for consumers and attract new members. It will also improve services to existing members across provincial borders.

Again, we have heard a lot of great feedback on this particular provision.

Credit Union Atlantic has hailed this move as “an important step forward for the credit union system...this provides a framework for a more competitive banking system in Canada and will enable further growth of the credit union alternative”.

The Case for Progress Committee, a coalition of several credit unions across this country, called it a “historic milestone”:

This new legislation benefits all Canadians by increasing their choices in selecting a financial institution. It will strengthen the stability and the competitiveness of the entire financial services industry in Canada.

In my short time today, I have only scratched the surface of what is clearly a very ambitious piece of legislation.

The jobs and economic growth act contains much more good news in this legislation that I am sure the opposition will welcome, items like the important financial support for excellent organizations such as the Canadian Youth Business Foundation, Genome Canada, Pathways to Education and the Rick Hansen Foundation.

Canada is certainly showing strong, hopeful signs of economic recovery. I do want to caution the House, though. The signs are still not strong enough to warrant a switch of focus away from the economy.

The economic action plan and its related components, like the jobs and economic growth act, is making an important positive contribution across Canada.

As The Toronto Star recently noted:

The Northern Tiger is back....

Canada's attractive record in job creation, GDP growth and comparative fiscal strength is well known....

You could call it “Canada's moment,” a chapter in history that finds the Canadian economy outperforming expectations while major foreign economies are still in distress.

Let us all work together, across the aisle and party lines, to keep up the momentum.

Let us support this legislation and build Canada's economic advantage today and for tomorrow.

[John McKay, Liberal, Scarborough—Guildwood, ON]

Mr. Speaker, I thank the hon. member for his speech. Apparently it was supposed to be about the jobs and economic growth act. We heard a lot about pensions, which do not seem to have that much to do with the particular bill in front of the House at this particular time.

I would be interested in the hon. member's comments on the use of the stimulus moneys.

What we know for sure is that we have added about $165 billion to the debt of this country. What we do not know for sure is whether any of that stimulus money actually contributed to the recovery of the economy. In fact there are those who say that not only did it not contribute to the recovery of the economy but it will actually act as a counterweight to future recoveries, because by the time the money gets into the economy, it will be competing with the private sector.

I would be interested in the hon. gentleman's comments with respect to whether he or the Department of Finance, or anyone, has an economic model that shows that the stimulus money actually assisted in the recovery of the economy.

[Ted Menzies, Conservative, Macleod, AB]

Mr. Speaker, I think even that hon. member understands, from his time sitting around the table at the Department of Finance in Canada, that these numbers do not just come out of a hat. I think all hon. members in this House realize that.

We put forward a number, 220,000 jobs, that would grow out of this stimulus money. We are over 160,000 new jobs since July of last year, so we are well on our way.

Budget 2010 is year two of a two-part plan, the economic action plan that put taxpayers' money into projects to stimulate the economy, and from all accounts we are hearing from all corners of this country, it is working. We have new jobs. We are protecting existing jobs. We are also providing employment insurance for those people who lost—

[The Deputy Speaker, Conservative, Andrew Scheer]

The hon. member for Hochelaga.

[Daniel Paillé, Bloc, Hochelaga, QC]

Mr. Speaker, I welcome this opportunity to question my colleague, the hon. member for Macleod, in Alberta, who is taking our questions on the implementation of the budget. However, one aspect has been completely overlooked. He was raising some questions and comments earlier, but I will leave it up to the member for Burlington to ask him some planted questions.

The member for Macleod undoubtedly knows that last Friday the chief justice of the Quebec Court of Appeal completely rejected the federal government's arguments, directly from the bench.

Now, in his home province, the Alberta Court of Appeal is about to give the same ruling, that is, it is about to stop the federal government from cutting jobs in Quebec and Alberta, jobs in the provincial securities commissions, affecting lawyers, notaries and financiers.

Why is the Parliamentary Secretary to the Minister of Finance conspiring with the Minister of Finance to cut jobs in Montreal, in my home province, and in his home province, Alberta?

[Ted Menzies, Conservative, Macleod, AB]

Mr. Speaker, the exact opposite is true.

The money we are injecting into this entire Canadian economy has probably provided more job growth in the province of Quebec than it has in my province of Alberta. It is a little troubling. We have one of the largest job losses in western Canada because of the oil and gas sector that actually provides heat for the hon. member's home and fuel for the hon. member's car. I am sure he is quite grateful for the fact that we can actually produce that in this country and do not have to import it.

However, considering a Canadian securities regulator, it is voluntary. Everyone in this House knows that, and I would encourage even the Bloc to get on board with supporting that voluntary Canadian securities regulator.

[Jim Maloway, NDP, Elmwood—Transcona, MB]

Mr. Speaker, Manitoba has very successful credit union movement. We have the Steinbach Credit Union and the Assiniboine Credit Union. The member mentioned that the credit unions were interested in registering federally and, as such, providing an alternative to the national banks.

Who has asked for this legislation? What are his projections as to how many credit unions will take him up on this offer and expand it across the country to compete with the banks?

[Ted Menzies, Conservative, Macleod, AB]

Mr. Speaker, to be very truthful, I am not sure how many credit unions will take us up on this but there is a number.

This came from our consultations with Canadians. Credit unions came to us and asked to be regulated federally so they could expand their operations to encourage more members.

Credit unions in our country are a great success story. They are membership owned. We have encouraged that. This is an opportunity for them to participate. One of the issues we faced when we were in our cross-country consultations prior to budget 2009 was access to credit. That was one of the most critical issues for individuals and for businesses. The more ways we can provide credit all across the country, the better it is for the employers to create more jobs in the country.

[Mike Wallace, Conservative, Burlington, ON]

Mr. Speaker, I thank the hon. parliamentary secretary for the fine work he has been doing for the Minister of Finance, not only today but in the committee as well. He is a great leader in committee.

The budget is titled, “Leading the Way on Jobs and Growth”. Would the parliamentary secretary comment on this? This past weekend we heard the Leader of the Opposition talk about increasing corporate taxes. Why is increasing corporate taxes the wrong approach and why is not included in this budget?

[Ted Menzies, Conservative, Macleod, AB]

Mr. Speaker, I, as well, would like to thank the hon. member for Burlington for his great work on the committee.

The member travelled to more cities in our prebudget tour than I had the opportunity to. He has a great reflection of what is happening across the country. I know he has heard what would happen if the businesses in his riding faced higher taxes.

The Liberals came back from their spenders' conference and said that they would raise taxes if they became government. They are claiming that they are going to stop the fall in taxes. Anyone who has sat in the House knows that this tax cut has already been legislated. If the Liberals got their way, God forbid, look out Canada, higher taxes.

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, I did attend the briefing yesterday.

I would like to ask the parliamentary secretary a question. We have virtually an omnibus bill, which has many items that are not in the budget. One of the things we did not see any language on or hear about last night was the new imposition of the 31.5% tax on income trusts.

Could the parliamentary secretary explain to the House and all Canadians what changes have been made to the Income Tax Act to give effect to that tax and when did they happen?

[Ted Menzies, Conservative, Macleod, AB]

Mr. Speaker, I know it has been a busy week, but I believe it was two nights ago when the hon. member joined us. It cannot have been last night. I know we have had such fun at those briefings.

This government has cut over 100 taxes since we took office in 2006. That has been a focus, because we understand that by cutting taxes, it creates a fairer tax regime for all Canadians.

The House resumed from March 31, consideration of the motion that Bill C-9, An Act to implement certain provisions of the budget tabled in Parliament on March 4, 2010 and other measures, be read the second time and referred to a committee.

[John McKay, Liberal, Scarborough—Guildwood, ON]

Mr. Speaker, it is an opportunity today to talk about this inaptly named jobs and economic growth recovery act since it is my view that the government has had virtually nothing to do with this recovery, notwithstanding a great deal of back patting that seems to go on by those on the side opposite.

Members might have noticed a pattern over the years of the Prime Minister not being overly fond of those who contradict him, especially those who used to be his best friends.

The people at the Fraser Institute, which is well described as a right-wing think tank based in Vancouver, used to be among the Prime Minister's best friends, at least they were until recently when they were on the receiving end of the Prime Minister's wrath. Why would the Fraser Institute, which is hardly a bastion of liberal thought, be on the receiving end of the Prime Minister's wrath? Well, it produced an analysis of the recovery which showed that the stimulus moneys that the government put into the economy which ran up the debt had virtually no impact on the recovery of the nation.

I do not know whether I should admit this in public, but I read the Fraser Institute publications and sometimes I agree with them and sometimes I disagree with them. They are generally well written, fairly piffy and generally provocative. It behooves us all to read widely, even those with whom we disagree. The Fraser Institute has even from time to time been so generous as to invite me to speak at one of its functions. . I suppose from time to time it needs a token Liberal at one of these functions, but I appreciate its generosity in inviting me. I do not know whether in fact I will be invited again. I do have the tie to prove that I was at one point an invited speaker. I regularly wear it to any funeral I go to.

What is it that has actually caught the Prime Minister's wrath? I will quote from Niels Veldhuis of the Fraser Institute, the senior economist and one of the study's co-authors. He says:

Although the federal government has repeatedly claimed credit for Canada’s improved economic performance in the second half of 2009, Statistics Canada data show that government spending and investment in infrastructure had a negligible effect on the country’s improved economic growth.

Home reno tax credit's impact 'negligible'.

That is notwithstanding its popularity.

The report's authors say they're not surprised by their findings, noting that infrastructure spending takes time to work its way through the system.

“The fear now is that spending on infrastructure will occur as the economy naturally begins to grow, meaning that government will be competing with the private sector for resources, resulting in increased costs and fewer private-sector projects”, Veldhuis says.

He goes on to question the stimulative value of the renovation tax credit which was, as he says, a “popular measure”, but it had a “negligible impact” on the GDP growth in the second half of 2009.

He goes on to say that “less than a tenth of the $47.2 billion in the stimulus package was earmarked for personal income tax reductions”, which the Fraser Institute argues was a far better method for economic stimulus.

He further states:

What we see now is that the stimulus packages put in place by Canadians governments in 2009 created massive government deficits, resulting in increased in debt while contributing little to the economic turnaround.

That is what made the Prime Minister and the Minister of Finance so exercised. This self-described right-wing think tank, formerly the best buddies and soulmates of the Prime Minister and Minister of Finance, had the audacity to say that the “emperor had no clothes”. It is not a good idea to criticize the finance minister or the Prime Minister if one expects to retain the best buddy status. The institute said that the impact of the stimulus package was negligible, which really hurts coming from friends.

What we do know is that the Conservative government has run up the debt by $165 billion, $49 billion in this year alone. That is the hard, cold fact directly from its budgetary documents.

What we can say for sure is that $165 billion has been loaded onto future taxpayers instead of any kind of a realistic plan. Instead of actually dealing with the runaway freight train, that is, the expenses of the government, it has postponed decisions and will continue to postpone decisions.

The closest the government gets to a decision is the $17.5 billion so-called savings measures, money that it was going to spend but are now not proposing to spend. The biggest component of the money it was going to spend and is not now going to spend is the money for the world's poor, $4.5 billion. So $4.5 billion of the $17.5 billion, somewhere in the order of 20% to 25% of the entire package, will be loaded on people who do not vote, who cannot vote and who live in other countries. That is kind of an easy decision to make if the government really wants to show it is semi-serious about getting costs under control.

The other biggest hunk is the $6 or $7 billion for the civil servants. These are the ones who were hired to implement the jobs and growth agenda which, arguably, according to the Fraser Institute,has had a negligible impact, and they are being fired or will be fired or anticipate being fired as part of the so-called savings. Therefore, $6 or $7 billion out of the $17.5 billion will be put onto the backs of the civil servants who were actually hired to implement the plan that does not work.

Even one of the Prime Minister's former speech writers, Michael Taube, had some rather uncomfortable things to say to the Prime Minister. He repeats the material from the Fraser Institute, and states

...the 1.1% GDP growth between the second and third quarters of 2009, stimulus spending and government consumption “played a negligible role in the economic turnaround” and only accounted for 0.2%. Meanwhile, the 1% GDP growth between the third and fourth quarters was “solely responsible” due to net exports, and not stimulus spending and government consumption.

The PM also said the Fraser Institute report was “completely wrong,” and “economic theory and history is clear, governments.... So much for [the Prime Minister's]reputation as a free market champion. ... The [the Prime Minister's] I knew supported the economic theory and history models of small government, private enterprise supporters such as Milton Friedman and Friedrich Hayek. Apparently, he’s now switched over to Paul Krugman.

Interestingly, I had an opportunity to talk to Mr. Krugman and ask him whether there was a model to show that if in fact one puts x number of billion dollars into an economy whether it can be identified as actual economic growth out of the economy.

If the government is taking taxpayer money and putting it into the economy of the nation, how does it measure that there is something that comes out the other side, or does it simply just run up a debt and have no product at the end of the day?

Mr. Krugman was not entirely forthcoming as to what that model would look like. I dare say that Mr. Krugman and the Fraser Institute might actually, from both sides of the economic spectrum, be able to argue quite cogently that if one is a Keynesian person, one cannot actually measure the economic product, and from the right-wing side of the equation, whatever measurement is there is negligible and one may well have just wasted all one's money.

Mr. Taube goes on to say:

But to take distinctly un-conservative positions after his stimulus spending’s net benefit was shown to be insignificant by an important Canadian conservative think-tank isn’t a wise strategy.

Kool-aid Conservative supporters might be happy with [the Prime Minister's] mock outrage. But red meat conservatives are tired of these shenanigans.

Mr. Taube is a former speech writer for the Prime Minister.

That is what the Conservatives' friends are saying. What do they get for their analyses? Mr. Taube or the Conservative think-tank get epithets from the Prime Minister and the Minister of Finance. They call it shabby, wrong, contradictory, poorly done, et cetera. What we get are vitriolic attacks, which is what we see in this place, rather than any reasoned debate.

The Prime Minister actually had the courage of his convictions saying that he or the finance minister would table the analysis that shows that the stimulus spending impacted on the economy in a positive way, in which case we could probably put the argument to rest or, better still, let the Parliamentary Budget Officer look at it. Of course, that is not too likely since the Parliamentary Budget Officer is used to being attacked by the finance minister.

The Parliamentary Budget Officer certainly did not get any kudos from the finance minister on March 11 when he said that the plan lacked detailed information and that he disapproved of the overall characterization of the economy and would not characterize the government's methods as a prudent basis for fiscal planning. His most significant point on March 11 was that he lacked the detailed information and data that the government was using to make its projections which found their way into the budget and which subsequently found their way into the legislation that is on the floor of the House.

It is not as if the Parliamentary Budget Officer disagrees with private sector economists. He generally accepts their propositions. What he does not agree with, because he does not get the co-operation from the Minister of Finance, is how the Conservatives got from there to here. What it produces is the stuff that the Prime Minister and the Parliamentary Budget Officer agree on and the product that the finance minister produces for his budget. The Parliamentary Budget Officer is rightly asking how they got from here to there and they answer by saying that they cannot tell him. That is pretty useless because if they cannot tell him, how can there be a reasoned debate as to whether the projections are correct?

We have the Fraser Institute arguing on the far right that whatever money has been spent has had a negligible impact, a speech writer saying the same thing, Mr. Krugman saying that there is no real economic model and then we have the Parliamentary Budget Officer being frozen out of the data or the modelling that would take him from the agreed upon point, which is the consensus data put forward by the private sector economists, to the product we see in the budget.

The Parliamentary Budget Officer has been an irritation to the government and the Minister of Finance for quite a while now. In 2008 and 2009 he consistently and accurately projected shortfalls and/or surpluses earlier than the Minister of Finance. Even when the Prime Minister was predicting a surplus in 2008, which just happened to coincide with the election, by the way, the Parliamentary Budget Officer said that there would be a deficit.

What are we supposed to do with this sort of thing? In 2008 the Prime Minister said that there would not be a recession in Canada and that we would be fine so long as we did not do stupid things, such as running a deficit. Then he suggested in October that there were good buying opportunities for Canadians. In November 2008, his failed economic statement promised a surplus for the next five years. Twelve days later he was contradicted by the Bank of Canada and announced that we were in fact in a recession. In December he had run up a deficit of $20 billion to $30 billion.

From September to December, a space of 90 days, we went from a surplus prediction by the Prime Minister/Minister of Finance to a $30 billion deficit. In January it was up to $40 billion, by the summer it was up to $56 billion and I think in this budget it settles itself down to about $54 billion.

The credibility of the Prime Minister and the Minister of Finance in terms of predicting surpluses and deficits has been shot. They will not share with the Parliamentary Budget Officer the reason for their “optimism”. The Fraser Institute seems to indicate that whatever moneys have been spent are having a negligible impact.

Their own view, their own ideological base, is quite upset with them because they have squandered $165 billion in accumulated deficits. The response on the part of the Minister of Finance and the Prime Minister is to launch vicious ad hominem attacks, which is of course a pattern we have seen for quite a while.

I want to contrast that with the handling of the monetary policy by Bank of Canada governor Carney. Mr. Carney's handling of the monetary policy during the same period was, in my view, a masterful job. When we are dealing with an economy, we have the monetary on one side and the fiscal on the other side. The fiscal is what the Minister of Finance controls and the monetary is what the governor of the Bank of Canada controls.

He had a judicious eye on the economy and manipulated the interest rate to maximize the benefit to the economy. Keeping an eye on inflation and the interest rate, he intervened in the market from time to time to buy up stranded debt and to improve liquidity. At all times, he did it in a respectful manner. At all times, he came before various parliamentary committees to tell them what he was doing, how he was doing it and the result he expected.

He did not at any time attack those who disagreed with him. There were those who did disagree with him. There were those who thought his analysis of the economy was somewhat rosy at one point. Others thought he was a touch too pessimistic. Others thought it was going to go up, then it was going to go down and then it was going to go up again. I do not know how it all turns out. In all instances, the governor of the Bank of Canada kept his cool and responded respectfully to inquiries. Even when there was disagreement as to whether or not he was being too optimistic, he kept the dialogue thoughtful and respectful.

Contrast that with what we get in this place. It is kind of a scorched earth policy that comes true when we are having dialogue about what is arguably the most significant responsibility of government, which is the management of the economy. What we get here is the first and ultimately most disrespectful thing: the prorogation of Parliament. If I am the Prime Minister and I do not like what Parliament is saying about whatever it is, why not just shut down Parliament? We saw the result of that. I dare say the Prime Minister will be pretty loathe to shut down Parliament again anytime in the near future.

We get the disrespect of shutting down Canada's chief nuclear officer, Linda Keen. We get the disrespect for Peter Tinsley, the military ombudsman who brought unwelcome news about various things. We get Paul Kennedy, who was engaged in a pretty significant study with respect to the RCMP, being fired summarily. We get disrespect for Canada's diplomatic corps and Richard Colvin, who said things that were “off message”. We see the disrespect for KAIROS. These folks were engaged in human rights activities that the government thinks they should not be involved in, so they were fired at midnight after 35 years of hard work.

The list goes on and on. We saw Scott Clark, the former deputy finance minister. We saw Ed Clark, formerly an official in the Department of Finance, who had the temerity to say that we should possibly be having an adult conversation about what revenues the government actually needs to do what it needs to do.

What do they all have in common? They have the courage to say what they think. As a consequence of their courage in saying what they think, there have been malicious, ad hominem attacks.

This is a democracy chill. It is a free speech chill. Frankly, it is no way to run a country.